Schrock v. Learning Curve International, Inc., et al.

Seventh Circuit holds that (1) derivative works are not held to a higher level of originality in order to be copyrighted, and (2) so long as the author of the derivative work had permission to create the derivative work, that author did not need separate permission to obtain a copyright registration for the derivative work.

Defendant HIT Entertainment owns the copyright in the Thomas & Friends train characters. It granted a license to Learning Curve International to make toy figures based on the characters. In turn, Learning Curve hired plaintiff, Daniel Schrock, a professional photographer, to take pictures of the toys for promotional materials. Months after Learning Curve stopped using Schrock’s photography services, Schrock registered his photos for copyright protection. Schrock then brought a copyright infringement claim against HIT and Learning Curve. Schrock alleged that HIT and Learning Curve continued to use his registered photographs in their advertising and product packaging which constituted an infringement of his derivative work. The district court dismissed the case on summary judgment, holding that because the photographs were derivative works of the toys, and Schrock did not have the underlying copyright owner’s permission to register the derivative works, he could not sue for copyright infringement.

Reversing the district court’s grant of summary judgment, the Seventh Circuit first dealt with the unresolved issue of whether photographs of a copyrighted work constitute derivative works under the Copyright Act. Because the classification of plaintiff’s photos as derivative works did not affect the applicable legal standard for determining copyrightability, the court sidestepped the issue and assumed that the photos were derivative works.

The Seventh Circuit then held that while the plaintiff needed the permission of the original copyright holder to create a non-infringing derivative work (which the plaintiff in this case had), the plaintiff did not need separate or additional permission to copyright the derivative work. The court determined that under the Copyright Act, the right to copyright a derivative work by the author of the derivative work “arises by operation of law” and through authority from the underlying copyright owner, although the court further held that this can be changed by contract between the parties.

The Seventh Circuit also considered the level of creativity required for granting derivative photographic works copyright protection. Learning Curve and HIT contended that derivative works are subject to a higher standard of originality. In support, they cited to the circuit court’s language in Gracen v. Bradford Exchange, 698 F.2d 300 (7th Cir. 1983), which stated a derivative work must be “substantially different from the underlying work to be copyrightable.” In dismissing this argument, the court emphasized that, read in context, neither Gracen, or the precedent upon which Gracen relies, nor the Copyright Act suggest that a heightened standard of originality applies to derivative works. Accordingly, the court held that for derivative works, as for any other work, all that is needed is a “non-trivial expressive variation” from the public domain or other existing works that enables the new work to be readily distinguished from its predecessors. This establishes what the court characterized as a “concededly . . . low threshold.”

Learning Curve and HIT put fourth three reasons why Schrock’s photographs, even if subjected to the notably low standard, failed the originality test. First, in defendants’ view, the photographs were intended to serve the “purely utilitarian function” of identifying products for customers. The purpose of the photographs, the court nonetheless explained, had no bearing on their protectibility. Second, defendants asserted that Schrock’s photos fell within the scènes à faire doctrine and were therefore not copyrightable. Learning Curve and HIT proposed that because images of its Thomas & Friends toys will be common in all product photos of the toys, no product photos can be copyrighted. The court noted, however, that the presence of common copyrightable elements does not forfeit copyright protection of the work as a whole. However small Schrock’s contribution may be, the court stressed, it is at least protected against “the type of outright copying that occurred here.” Learning Curve and HIT’s third argument relied upon the fundamental tenet of copyright law that protection cannot attach when the idea and the expression merge. In their opinion, Schrock’s photos were “straightforward” product photos, thus Schrock had done nothing more than “express” the “idea” of “basic product photography.” The circuit court rejected this argument as it falsely insinuated that all accurate product photos are uncopyrightable.

The court remanded for a determination as to whether there was an oral license between the parties.